Investors in companies controlled by Rupert Murdoch have been dumping the shares amid fears on both sides of the Atlantic over the fallout from the phone-hacking scandal at the News of the World.
Shares in broadcaster BSkyB are down 5% in the last week, wiping some £666m off the value of the business, while News Corp had lost 2.6% – slicing some $400m off the value of the News of the World’s ultimate parent company. Many hedge funds which had bought into BSkyB in the hope of making a quick profit from the bid have been selling the shares on fears that the deal now faces substantial delay.

The British prime minister’s former communications director and former editor of News of the World, Andy Coulson, is now under arrest.

To get a sense of the political impact these events are having on David Cameron’s leadership, a scathing commentary in the Tory-friendly Daily Telegraph by Peter Oborne sums up the situation:

In the careers of all prime ministers there comes a turning point. He or she makes a fatal mistake from which there is no ultimate recovery. With Tony Blair it was the Iraq war and the failure to find weapons of mass destruction. With John Major it was Black Wednesday and sterling’s eviction from the Exchange Rate Mechanism. With Harold Wilson, the pound’s devaluation in 1967 wrecked his reputation.
Each time the pattern is strikingly similar. Before, there is a new leader with dynamism, integrity and carrying the faith of the nation. Afterwards, the prime minister can stagger on for years, but as increasingly damaged goods: never is it glad, confident morning again.
David Cameron, who has returned from Afghanistan as a profoundly damaged figure, now faces exactly such a crisis. The series of disgusting revelations concerning his friends and associates from Rupert Murdoch’s News International has permanently and irrevocably damaged his reputation.
Until now it has been easy to argue that Mr Cameron was properly grounded with a decent set of values. Unfortunately, it is impossible to make that assertion any longer. He has made not one, but a long succession of chronic personal misjudgments.
He should never have employed Andy Coulson, the News of the World editor, as his director of communications. He should never have cultivated Rupert Murdoch. And – the worst mistake of all – he should never have allowed himself to become a close friend of Rebekah Brooks, the chief executive of the media giant News International, whose departure from that company in shame and disgrace can only be a matter of time.
We are talking about a pattern of behaviour here. Indeed, it might be better described as a course of action. Mr Cameron allowed himself to be drawn into a social coterie in which no respectable person, let alone a British prime minister, should be seen dead.
It was called the Chipping Norton set, an incestuous collection of louche, affluent, power-hungry and amoral Londoners, located in and around the Prime Minister’s Oxfordshire constituency. Brooks and her husband, the former racing trainer Charlie Brooks, live in a house scarcely a mile from David and Samantha Cameron’s constituency home. The two couples meet frequently, and have continued to do so long after the phone hacking scandal became well known.
PR fixer Matthew Freud, married to Mr Murdoch’s daughter Elisabeth, is another member of this Chipping Norton set. When Mr Cameron bumped into Freud at Rebekah Brooks’s wedding two years ago, he and Mr Freud greeted each other with exuberant high-fives to signal their exclusive friendship.
The Prime Minister cannot claim in defence that he was naively drawn in to this lethal circle. He was warned – many times. Shortly before the last election he was explicitly told about the company he was keeping. Alan Rusbridger – editor of The Guardian newspaper, which has performed such a wonderful service to public decency by bringing to light the shattering depravity of Mr Murdoch’s newspaper empire – went to meet one of Mr Cameron’s closest advisers shortly before the last election. He briefed this adviser very carefully about Mr Coulson, telling him many troubling pieces of information that could not then be put into the public domain.
Mr Rusbridger then went to see Nick Clegg, now the deputy prime minister. So Mr Cameron and Mr Clegg – the Prime Minister and the Deputy Prime Minister – knew all about Mr Coulson before last May’s coalition negotiations. And yet they both paid no attention and went on to make him the Downing Street director of communications, an indiscretion that beggars belief.
So the Prime Minister is in a mess. To put the matter rather more graphically, he is in a sewer. The question is this: how does he crawl out and salvage at least some of his reputation for decency and good judgment?

Rupert Murdoch’s effort to save his own skin has been bold (even if predictably cynical). To get a sense of what shutting down News of the World means, keep in mind that its circulation of 2.7 million is more than twice the size of America’s largest circulation Sunday newspaper, the New York Times (1.3 million).

Rupert Murdoch’s decision to close the 168-year-old News of the World certainly takes one’s breath away. For a moment one is tempted to marvel at the media tycoon’s decisiveness. Despite inexorably losing sales over the past couple of decades, the title is still Britain’s highest selling newspaper, and profitable. To shut such an operation seems a very big deal indeed.
But it actually isn’t – except for those who will lose their jobs. The paper’s closure after next Sunday is a piece of corporate window dressing designed to persuade us that News International is at long last taking the phone hacking scandal seriously, and that Murdoch should be allowed to proceed with the acquisition of the whole of BSkyB. We would do better to ask ourselves: what exactly has changed?
It is a fair bet that in a matter of weeks, News International will launch a paper called The Sun on Sunday, appealing to readers of the News of the World. The internet domain name for such a title was registered by persons unknown only two days ago.
What looks like an act of commercial self-sacrifice may turn out to be no more than an inconvenience to the company. News International’s decision to give all the revenues of next Sunday’s final issue to “good causes” is piece of calculated piety intended to make it appear caring.
My scepticism goes deeper. In his announcement to staff yesterday, the company’s British head, James Murdoch, spoke as though the News of the World were a separate entity from News International. He rightly said the paper had behaved abominably, and had “made statements to Parliament without it being in the full possession of the facts” – ie it lied.
But the News of the World is part of News International, and all its rampant illegal practices, and the subsequent cover-up, are ultimately the responsibility of Rupert and James Murdoch, and Rebekah Brooks, its chief executive.